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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 Commission File Number 0-20133
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 68-0222136
- -------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 485-4500
-------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __________
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
As of December 31, 1996, 1,946,243 Units of Limited Partnership interest were
outstanding. No market exists for the Units of Partnership interest and
therefore there exists no aggregate market value at December 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1. Business.............................................. 3
Item 2. Properties............................................ 4
Item 3. Legal Proceedings..................................... 4
Item 4. Submission of Matters to a Vote of Security Holders... 5
PART II
Item 5. Market for the Registrant's Securities and Related
Security Holder Matters............................... 5
Item 6. Selected Financial Data............................... 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 6
Item 8. Financial Statements and Supplementary Data........... 8
Item 9. Disagreements on Accounting and Financial
Disclosure Matters.................................... 24
PART III
Item 10. Directors and Executive Officers of the Registrant.... 24
Item 11. Executive Compensation................................ 25
Item 12. Security Ownership of Certain Beneficial Owners
and Management........................................ 25
Item 13. Certain Relationships and Related Transactions...............26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.............................................. 26
Signatures.......................................................... 27
<PAGE>
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PART I
Item 1. Business.
General Development of Business.
Phoenix Leasing Cash Distribution Fund V, L.P., a California limited
partnership (the "Partnership"), was organized on July 9, 1990. The Partnership
was registered with the Securities and Exchange Commission with an effective
date of November 4, 1991 and shall continue to operate until its termination
date unless dissolved sooner due to the sale of substantially all of the assets
of the Partnership or a vote of the Limited Partners. The Partnership will
terminate on December 31, 2003. The General Partner is a California limited
partnership, Phoenix Leasing Associates II L.P., the general partner of which is
Phoenix Leasing Associates II, Inc., a Nevada corporation and a wholly-owned
subsidiary of Phoenix Leasing Incorporated, a California corporation. The
General Partner or its affiliates also is or has been a general partner in
several other limited partnerships formed to invest in capital equipment and
other assets.
The registration was for 5,000,000 units of limited partnership
interest at a price of $20 per unit. The Partnership completed its public
offering on October 28, 1993. As of December 31, 1993, the Partnership sold
2,045,838 units for a total capitalization of $40,916,760. Of the proceeds
received through the offering, the Partnership has incurred $6,131,000 in
organizational and offering expenses for a net capitalization of $34.8 million.
From the initial formation of the Partnership through December 31,
1996, the total investments in equipment leases, investments in joint ventures
and financing transactions (loans) approximate $87,160,000. The average initial
firm term of contractual payments from equipment subject to lease was 46.75
months, and the average initial net monthly payment rate as a percentage of the
original purchase price was 2.70%. The average initial firm term of contractual
payments from loans was 51.09 months.
The Partnership's principal objective is to produce cash flow to the
investors on a continuing basis over the life of the Partnership. To achieve
this objective, the Partnership will invest in various types of capital
equipment and other assets to provide leasing or financing of the same to third
parties, including Fortune 1000 companies and their subsidiaries, middle-market
companies, emerging growth companies, franchised businesses, pay television
system operators and others, on either a long-term or short-term basis. The
types of equipment that the Partnership will invest in will include, but is not
limited to, computer peripherals, small computer systems, communications
equipment, IBM mainframes, IBM-software compatible mainframes, office systems,
CAE/CAD/CAM equipment, telecommunications equipment, cable television equipment,
medical equipment, production and manufacturing equipment and software products.
At least 75% of the net offering proceeds has been allocated for the acquisition
of computer peripherals.
The Partnership has acquired significant amounts of equipment or assets
with the net offering proceeds. In addition, the Partnership has acquired
equipment through the use of debt financing, however, the ratio of the
outstanding debt to net capital contributions less any investment in Leveraged
Joint Ventures at the end of the Partnership's offering period will not exceed
one-to-one. The cash flow generated by such investments in equipment leases or
financing transactions will be used to provide for debt service, to provide cash
distributions to the Partners and the remainder will be reinvested in capital
equipment or other assets.
Narrative Description of Business.
The Partnership has acquired and intends to acquire and lease equipment
pursuant to either "Operating" leases or "Financing" leases. At December 31,
1996, approximately 95% of the equipment owned by the Partnership was classified
as Financing leases. The Partnership has also provided and intends to provide
financing secured by assets in the form of notes receivable. Operating leases
are generally short-term leases under which the lessor will receive aggregate
rental payments in an amount that is less than the purchase price of the
equipment. Financing leases are generally for a longer term under which the
noncancellable rental payments due during the initial term of the lease are at
least sufficient to recover the purchase price of the equipment. It is
anticipated that a significant portion of the net offering proceeds to the
Partnership will be invested in capital equipment subject to Operating leases.
Operating leases represent a greater risk along with a greater
potential return to the Partnership than do Financing leases. In order to
recover its investment in equipment leased pursuant to an Operating lease, the
Partnership will, upon termination of such lease, either have to obtain a
renewal from the original lessee, find a new lessee or sell the equipment. The
terms for Operating leases are for a shorter duration than Financing leases.
Consequently, the revenues derived from the initial term of Operating leases are
generally greater than those of Financing leases. Due to technological,
competitive, market and economic factors, it is anticipated that renewals or
<PAGE>
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remarkets of leases will be at a lower rental rate than that of the initial
lease terms.
In addition to acquiring equipment for lease to third parties, the
Partnership, either directly or through the investment in joint ventures, has
provided financing to certain emerging growth companies, cable television
operators, manufacturers and their lessees with respect to assets leased
directly by such manufacturers to third parties. The Partnership maintains a
security interest in the assets financed and in the receivables due under any
lease or rental agreement relating to such assets. Such security interests
constitute a lien on the equipment and will give the Partnership the right, upon
default, to obtain possession of the assets.
Competition. The General Partner intends to concentrate the
Partnership's activities in the equipment leasing and financing industry, an
area in which the General Partner has developed an expertise. The computer
equipment leasing industry is extremely competitive. The Partnership competes
with many well established companies having substantially greater financial
resources. Competitive factors include pricing, technological innovation and
methods of financing (including use of various short-term and long-term
financing plans, as well as the outright purchase of equipment). Generally, the
impact of these factors to the Partnership would be the realization of increased
equipment remarketing and storage costs, as well as lower residuals received
from the sale or remarketing of such equipment.
Other.
A brief description of the type of assets in which the Partnership has
invested through December 31, 1996, together with information concerning the
uses of assets is set forth in Item 2.
Item 2. Properties.
The Partnership is engaged in the equipment leasing and financing
industry and as such, does not own or operate any principal plants, mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans either directly or through its investment in joint ventures.
As of December 31, 1996, the Partnership owns equipment and has
outstanding loans to borrowers with an aggregate original cost of $50,392,000.
The equipment and loans have been made to customers located throughout the
United States. The following table summarizes the type of equipment owned or
financed by the Partnership, including its pro rata interest in joint ventures,
at December 31, 1996.
Percentage of
Asset Types Purchase Price(1) Total Assets
----------- ----------------- ------------
(Amounts in Thousands)
Furniture and Fixtures $18,751 37%
Capital Equipment Leased to Emerging Growth Companies 12,637 25
Computer Peripherals 8,856 18
Small Computer Systems 3,019 6
Financing of emerging growth companies 2,814 5
Financing of other businesses 1,965 4
Telecommunications 1,496 3
Miscellaneous 854 2
------- ---
TOTAL $50,392 100%
======= ===
(1) These amounts include the Partnership's pro rata interest in equipment
joint ventures of $4,797,000, financing joint ventures of $290,000, cost of
equipment on financing leases of $29,012,000 and original cost of
outstanding loans of $4,489,000 at December 31, 1996.
Item 3. Legal Proceedings.
The Registrant is not a party to any pending legal proceedings which would
have a material impact on its financial position.
<PAGE>
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PART II
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Limited Partners, through the
solicitation of proxies or otherwise, during the year covered by this report.
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters.
(a) The Registrant's limited partnership interests are not publicly traded.
There is no market for the Registrant's limited partnership interests
and it is unlikely that any will develop.
(b) Approximate number of equity security investments:
Number of Unit Holders
Title of Class as of December 31, 1996
---------------------------------- -----------------------
Limited Partners 2,408
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Amounts in Thousands Except for Per Unit Amounts)
<S> <C> <C> <C> <C> <C>
Total Income $ 7,362 $ 9,728 $12,678 $10,851 $ 4,893
Net Income (Loss) 2,158 340 2,610 1,559 304
Total Assets 24,988 31,207 42,728 51,604 36,090
Long-term Debt Obligations -- 675 4,821 11,410 9,324
Distributions to Partners 4,064 4,157 4,198 3,391 1,031
Net Income per Limited Partnership Unit 1.02 .11 1.21 .83 .42
Distributions per Limited Partnership Unit 2.00 2.00 2.00 1.88 1.52
</TABLE>
The above selected financial data should be read in conjunction with
the financial statements and related notes appearing elsewhere in this report.
<PAGE>
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund V, L.P. (the Partnership)
reported net income of $2,158,000, $340,000 and $2,610,000 during the year ended
December 31, 1996, 1995 and 1994, respectively. The increase in earnings for the
year ended December 31, 1996, compared to 1995, is attributable to a decrease in
total expenses, primarily depreciation expense, which exceeded the decline in
total revenues. The decrease in net income during 1995, as compared to 1994, was
due to a decrease in rental income without a corresponding decrease in
depreciation expense.
Total revenues decreased for both the year ended December 31, 1996 and
1995. The decrease in total revenues of $2,366,000 and $2,950,000 during 1996
and 1995, respectively, as compared to the previous year, is due to decreases in
rental income and earned income from financing leases. The decline in rental
income of $2,012,000 and $2,831,000 for the year ended December 31, 1996 and
1995, respectively, compared to the previous year, is a result of a reduction in
the amount of equipment owned by the Partnership. At December 31, 1996, the
Partnership owned equipment with an aggregate original cost of $40.8 million,
compared to $50.5 million and $57.4 million at December 31, 1995 and 1994,
respectively. During 1995 and 1996, many of the initial lease terms of the
Partnership's equipment expired. As a result, the Partnership has renewed the
leases with the current lessee, remarketed the equipment to new lessees or sold
the equipment. The effect has been a reduction of the Partnership's earnings
during this remarketing period. Total revenues were $7.4 million for the year
ended December 31, 1996, compared to $9.7 million for 1995 and $12.7 million for
1994.
The decrease in earned income from financing leases of $497,000 and
$362,000 for the year ended December 31, 1996 and 1995, respectively, compared
to the prior year, is a result of a decline in the Partnership's investment in
financing leases. At December 31, 1996, the Partnership had a net investment in
financing leases of $15.1 million, compared to $19.9 million and $23.5 million
at December 31, 1995 and 1994, respectively. The investment in financing leases,
as well as earned income from financing leases, will decrease over the lease
term as the Partnership amortizes income over the life of the lease using the
interest method. This decrease will be offset in part by a continuous investment
of the excess cash flows of the Partnership in new leasing and financing
transactions over the life of the Partnership.
The decline in rental income and earned income from financing leases
for the year ended December 31, 1996, compared to 1995, is in part offset by a
gain on sale of securities of $390,000. The securities sold consisted of common
stock and warrants for the purchase of common stock granted to the Partnership
as part of financing agreements with emerging growth companies that are publicly
traded. The Partnership received proceeds of $403,000 from the sale of these
securities during the year ended December 31, 1996. In addition, at December 31,
1996, the Partnership had remaining interests in stock warrants with unrealized
gains of approximately $369,000. These stock warrants contain certain
restrictions, but are generally exercisable within one year.
Total expenses decreased by $4,184,000 for the year ended December 31,
1996, compared to the prior year. The decrease in total expenses for 1996,
compared to 1995, is primarily due to a reduction in depreciation expense of
$3,757,000. The decrease in depreciation expense is attributable to a large
portion of the Partnership's equipment portfolio having been fully depreciated.
Additionally, depreciation was higher during 1995 due to the Partnership
providing additional depreciation on various leases that had come to the end of
their initial term, where the estimated fair market value was not expected to
exceed the net book value of such leases.
Partially offsetting the decrease in depreciation expense for the year
ended December 31, 1996, compared to the prior year, is an increase in provision
for losses on receivables of $273,000. During the year ended December 31, 1995,
the Partnership received a settlement payment on an outstanding note receivable
from a cable television system operator of $1,269,000 that had been classified
as impaired. The settlement was for an amount in excess of the net carrying
value of the note. As a result, the Partnership recognized as income, a
reduction to the allowance for doubtful notes receivable of $284,000 related to
this note. Such a transaction did not occur during 1996.
The small decrease in total expenses of $680,000 for the year ended
December 31, 1995, compared to 1994, was due to a decrease of $390,000 in
interest expense and a decrease of $367,000 in the provision for losses on
receivables, as previously discussed. The decrease in interest expense during
1995, as compared to 1994, was due to the decrease in the Partnership's
outstanding notes payable. At December 31, 1995, the Partnership reported
outstanding notes payable of $3,594,000, as compared to $11,243,000 at December
31, 1994. The Partnership's notes payable were paid off in full during the year
ended December 31, 1996, and as a result interest expense for the year ended
<PAGE>
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December 31, 1996, compared to 1995, also experienced a decrease.
Inflation affects the Partnership in relation to the current cost of
equipment placed on lease and the residual values realized when the equipment
comes off-lease and is sold. During the last several years inflation has been
low, thereby having very little impact upon the investments of the Partnership.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from contractual
obligations with lessees and borrowers for fixed terms at fixed payment amounts.
The future liquidity of the Partnership is dependent upon the payment of the
Partnership's contractual obligations from its lessees and borrowers. As the
initial lease terms of the Partnership's short term operating leases expire, the
Partnership will re-lease or sell the equipment as it becomes available. The
future liquidity of the Partnership in excess of the contractual obligations
will depend upon the General Partner's success in re-leasing and selling the
Partnership's equipment when the lease terms expire.
The cash generated from leasing and financing activities during the
year ended December 31, 1996 was $13,665,000, as compared to $15,542,000 during
the year ended December 31, 1995 and $16,973,000 during the year ended December
31, 1994. These proceeds, combined with the cash on hand, were used for the
repayment of debt and for the payment of cash distributions to the partners for
1996, 1995 and 1994. During the year ended December 31, 1996, the Partnership
paid off its outstanding debt of $3,594,000, as compared to repayments of
$7,649,000 during 1995 and $6,603,000 during 1994.
The Partnership will continue to reinvest the cash generated by
operating and financing activities in new leasing and financing transactions
over the life of the Partnership. During the year ended December 31, 1996, the
Partnership invested $4,421,000 in equipment leases and $2,676,000 in notes
receivable, as compared to investments of $4,862,000 in equipment leases and
$892,000 in notes receivable in 1995, and investments of $9,600,000 in equipment
leases and $721,000 in notes receivable in 1994.
As of December 31, 1996, the Partnership owned equipment being held for
lease with an original cost of $3,945,000 and a net book value of $278,000,
compared to $3,516,000 and $714,000, respectively, at December 31, 1995 and
$4,416,000 and $1,497,000, respectively, at December 31, 1994. The General
Partner is actively engaged, on behalf of the Partnership, in remarketing and
selling the Partnership's equipment as it becomes available.
The cash distributed to partners for the year ended December 31, 1996
was $4,064,000, as compared to $4,157,000 and $4,198,000 during the year ended
December 31, 1995 and 1994, respectively. In accordance with the Partnership
Agreement, the limited partners are entitled to 97% of the cash available for
distribution and the General Partner is entitled to 3%. As a result, the limited
partners received $3,941,000, $4,032,000 and $4,072,000 in distributions during
the year ended December 31, 1996, 1995 and 1994, respectively. The cumulative
distributions to the Limited Partners are $16,349,000, $12,408,000 and
$8,376,000 as of December 31, 1996, 1995 and 1994, respectively. The General
Partner received $123,000, $125,000 and $126,000 in cash distributions for the
year ended December 31, 1996, 1995 and 1994, respectively. The Partnership plans
to make quarterly distributions to partners during 1997 at the same rate as the
current distributions.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses and distributions.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could differ from those anticipated by some of the statements
made above. Limited Partners are cautioned that such forward-looking statements
involve risks and uncertainties including without limitation the following: (i)
the Partnership's plans are subject to change at any time at the discretion of
the General Partner of the Partnership, (ii) future technological developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services, (iv) substantial customer defaults or cancellations, (v)
changes in business conditions and the general economy, (vi) changes in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.
<PAGE>
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
YEAR ENDED DECEMBER 31, 1996
<PAGE>
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REPORT OF INDEPENDENT AUDITORS
The Partners
Phoenix Leasing Cash Distribution Fund V, L.P.
We have audited the financial statements of Phoenix Leasing Cash Distribution
Fund V, L.P. (a California limited partnership) listed in the accompanying index
to financial statements (Item 14(a)). Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and the schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects, the
financial position of Phoenix Leasing Cash Distribution Fund V, L.P. at December
31, 1996 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
San Francisco, California
January 20, 1997
<PAGE>
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<TABLE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
<CAPTION>
December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,140 $ 3,131
Accounts receivable (net of allowance for losses on accounts
receivable of $153 and $194 at December 31, 1996 and 1995,
respectively) 187 372
Notes receivable (net of allowance for losses on notes receivable
of $124 and $55 at December 31, 1996 and 1995, respectively) 3,333 1,487
Equipment on operating leases and held for lease (net of
accumulated depreciation of $8,389 and $12,330 at
December 31, 1996 and 1995, respectively) 719 3,381
Net investment in financing leases (net of allowance for early
terminations of $519 and $238 at December 31, 1996 and
1995, respectively) 15,139 19,914
Investment in joint ventures 1,383 1,449
Capitalized acquisition fees(net of accumulated amortization
of $2,015 and $1,643 at December 31, 1996 and 1995,
respectively) 591 751
Other assets 496 722
-------- --------
Total Assets $ 24,988 $ 31,207
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,126 $ 1,045
Notes payable -- 3,594
-------- --------
Total Liabilities 1,126 4,639
-------- --------
Partners' Capital:
General Partner (76) (96)
Limited Partners, 5,000,000 units authorized, 2,045,838
units issued and 1,946,243 and 2,002,101 units
outstanding at December 31, 1996 and 1995, respectively 23,569 26,176
Unrealized gains on available-for-sale securities 369 488
-------- --------
Total Partners' Capital 23,862 26,568
-------- --------
Total Liabilities and Partners' Capital $ 24,988 $ 31,207
======== ========
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1996 1995 1994
---- ---- ----
INCOME
Rental income $ 3,329 $ 5,341 $ 8,172
Earned income, financing leases 2,643 3,140 3,502
Interest income, notes receivable 429 620 373
Equity in earnings from joint
ventures, net 324 429 295
Gain on sale of securities 390 -- --
Other income 247 198 336
------- ------- -------
Total Income 7,362 9,728 12,678
------- ------- -------
EXPENSES
Depreciation 3,023 6,780 6,563
Amortization of acquisition fees 372 502 687
Lease related operating expenses 237 292 142
Management fees to General Partner 486 562 616
Reimbursed administrative costs to
General Partner 370 434 380
Interest expense 131 553 943
Provision for losses on receivables 350 77 444
General and administrative expenses 235 188 293
------- ------- -------
Total Expenses 5,204 9,388 10,068
------- ------- -------
NET INCOME $ 2,158 $ 340 $ 2,610
======= ======= =======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 1.02 $ .11 $ 1.21
======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 143 $ 127 $ 151
Limited Partners 2,015 213 2,459
------- ------- -------
$ 2,158 $ 340 $ 2,610
======= ======= =======
The accompanying notes are an integral
part of these statements.
<PAGE>
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<TABLE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
<CAPTION>
General Unrealized
Partner's Limited Partners' Gains Total
Amount Units Amount (Losses) Amount
------ ----- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $(123) 2,039,138 $ 32,127 $-- $ 32,004
Net income 151 -- 2,459 -- 2,610
Distributions to partners ($2.00 per
limited partnership unit) (126) -- (4,072) -- (4,198)
Redemptions of capital -- (14,108) (210) -- (210)
----- ---------- -------- ----- --------
Balance, December 31, 1994 (98) 2,025,030 30,304 -- 30,206
Net income 127 -- 213 -- 340
Distributions to partners ($2.00 per limited
partnership unit) (125) -- (4,032) -- (4,157)
Redemptions of capital -- (22,929) (309) -- (309)
Change for the year in unrealized gain on
available-for-sale securities -- -- -- 488 488
----- ---------- -------- ----- --------
Balance, December 31, 1995 (96) 2,002,101 26,176 488 26,568
Net income 143 -- 2,015 -- 2,158
Distributions to partners ($2.00 per limited
partnership unit) (123) -- (3,941) -- (4,064)
Redemptions of capital -- (55,858) (681) -- (681)
Change for the year in unrealized gain on
available-for-sale securities -- -- -- (119) (119)
----- ---------- -------- ----- --------
Balance, December 31, 1996 $ (76) 1,946,243 $ 23,569 $ 369 $ 23,862
===== ========== ======== ===== ========
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1996 1995 1994
---- ---- ----
Operating Activities:
Net income $ 2,158 $ 340 $ 2,610
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,023 6,780 6,563
Amortization of acquisition fees 372 502 687
Loss (gain) on sale of equipment (197) 278 (16)
Equity in earnings from joint ventures,
net (324) (429) (295)
Gain on sale of securities (390) -- --
Provision for early termination,
financing leases 281 303 369
Provision for (recovery of) losses on
notes receivable 69 (254) 10
Provision for losses on accounts receivable -- 28 65
Decrease (increase) in accounts receivable 185 (84) 70
Increase (decrease) in accounts payable and
accrued expenses 124 (208) (347)
Decrease in other assets 107 66 106
------- -------- --------
Net cash provided by operating activities 5,408 7,322 9,822
------- -------- --------
Investing Activities:
Principal payments, financing leases 7,496 6,909 6,183
Principal payments, notes receivable 761 1,311 968
Proceeds from sale of equipment 1,255 1,075 1,223
Proceeds from sale of securities 403 -- --
Distributions from joint ventures 436 527 6,974
Purchase of equipment -- (2) (521)
Investment in financing leases (4,421) (4,860) (9,079)
Investment in notes receivable (2,676) (892) (721)
Investment in joint ventures (46) -- (290)
Investment in securities (13) -- --
Payment of acquisition fees (255) (199) (359)
------- -------- --------
Net cash provided by investing activities 2,940 3,869 4,378
------- -------- --------
Financing Activities:
Payments of principal, notes payable (3,594) (7,649) (6,603)
Redemptions of capital (681) (309) (210)
Syndication costs -- -- (79)
Distributions to partners (4,064) (4,157) (4,198)
------- -------- --------
Net cash used by financing activities (8,339) (12,115) (11,090)
------- -------- --------
Increase (decrease) in cash and cash equivalents 9 (924) 3,110
Cash and cash equivalents, beginning of period 3,131 4,055 945
------- -------- --------
Cash and cash equivalents, end of period $ 3,140 $ 3,131 $ 4,055
======= ======== ========
Supplemental Cash Flow Information:
Cash paid for interest expense $ 130 $ 567 $ 921
The accompanying notes are an integral
part of these statements.
<PAGE>
Page 14 of 28
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. Organization and Partnership Matters.
Phoenix Leasing Cash Distribution Fund V, L.P., a California limited
partnership (the "Partnership"), was formed on July 9, 1990, to invest in
capital equipment of various types and to lease such equipment to third parties
on either a long-term or short-term basis, and to provide financing to emerging
growth companies and cable television system operators. The Partnership met
minimum investment requirements on January 7, 1992. The Partnership's
termination date is December 31, 2003.
The Partnership has also made investments in joint ventures with
affiliated partnerships managed by the General Partner for the purpose of
reducing the risks of financing or acquiring certain capital equipment leased to
third parties (see Note 6).
For financial reporting purposes, Partnership net income and net losses
will be allocated 99% to the Limited Partners and 1% to the General Partner. In
addition, the General Partner will be allocated gross rental and interest income
in amounts equal to the distributions that it receives from the Partnership.
Syndication costs will be allocated 1% to the General Partner and 99% to the
Limited Partners.
The General Partner is entitled to receive 3% of all distributions
until the Limited Partners have recovered their initial capital contributions
plus a cumulative return of 10% per annum. Thereafter, the General Partner will
receive 15% of all cash distributions. From inception of the Partnership until
September 30, 1998, the General Partner's interest in Cash Available for
Distribution is subordinated in any calendar quarter until the Limited Partners
receive quarterly distributions equal to 2.50% of their capital contributions
(i.e., 10% per annum), prorated for any partial period.
In the event the General Partner has a deficit balance in its capital
account at the time of Partnership liquidation, it will be required to
contribute the amount of such deficit to the Partnership.
As compensation for management services, the General Partner receives a
fee, payable quarterly, subject to certain limitations, in an amount equal to 3%
of the Partnership's gross revenues for the quarter from which such payment is
being made, which revenues shall include, but are not limited to, rental
receipts, maintenance fees, proceeds from the sale of equipment and interest
income.
The General Partner will be compensated for services performed in
connection with the analysis of assets available to the Partnership, the
selection of such assets and the acquisition thereof, including obtaining
lessees for the equipment, negotiating and concluding master lease agreements
with certain lessees. As compensation for such acquisition services, the General
Partner will receive a fee equal to 3%, subject to certain limitations, of (a)
the purchase price of equipment acquired by the Partnership or equipment leased
to customers by manufacturers, the financing for which is provided by the
Partnership, or (b) financing provided to businesses such as cable operators,
emerging growth companies, or security monitoring system companies, payable upon
such acquisition or financing, as the case may be. Acquisition fees are
amortized over the life of the assets principally on a straight-line basis.
<PAGE>
Page 15 of 28
A schedule of compensation paid and distributions made to the General
Partner for the years ended December 31, follows:
1996 1995 1994
---- ---- ----
(Amounts in Thousands)
Management fees $486 $ 562 $ 616
Acquisition fees 213 173 310
Cash distributions 123 125 126
---- ------ ------
$822 $ 860 $1,052
==== ====== ======
Note 2. Summary of Significant Accounting Policies.
Leasing Operations. The Partnership's leasing operations consist of both
financing and operating leases. The financing method of accounting for leases
records as unearned income at the inception of the lease, the excess of net
rentals receivable and estimated residual value at the end of the lease term,
over the cost of equipment leased. Unearned income is credited to income monthly
over the term of the lease on a declining basis to provide an approximate level
rate of return on the unrecovered cost of the investment. Initial direct costs
of consummating new leases are capitalized and included in the cost of
equipment. The Partnership reviews its estimates of residual value at least
annually. If a decline in value has occurred which is other than temporary, a
reduction in the investment is recognized currently.
Under the operating method of accounting for leases, the leased
equipment is recorded as an asset at cost and depreciated. The Partnership's
leased equipment is depreciated primarily using an accelerated depreciation
method over the estimated useful life of six years.
The Partnership's policy is to review periodically the remaining
expected economic life of its rental equipment in order to determine the
probability of recovering its undepreciated cost. Such reviews address, among
other things, recent and anticipated technological developments affecting
computer equipment and competitive factors within the computer marketplace.
Although remarketing rental rates are expected to decline in the future with
respect to some of the Partnership's rental equipment, such rentals are expected
to exceed projected expenses, including depreciation. Where reviews of the
equipment portfolio indicate that rentals plus anticipated sales proceeds will
not exceed expenses in any future period, the Partnership revises its
depreciation policy and will provide additional depreciation as appropriate. As
a result of such periodic reviews, the Partnership provided additional
depreciation expense of $758,000, $2,147,000 and $114,000 ($.39, $1.07 and $.06
per limited partnership unit) for the years ended December 31, 1996, 1995 and
1994, respectively.
Rental income for the year is determined on the basis of rental
payments due for the period under the terms of the lease. Maintenance, repairs
and minor renewals of the leased equipment are charged to expense.
Investments in Joint Ventures. Minority investments in net assets of
the equipment and financing joint ventures reflect the Partnership's equity
basis in the ventures. Under the equity method of accounting, the original
investment is recorded at cost and is adjusted periodically to recognize the
Partnership's share of earnings, losses, cash contributions and cash
distributions after the date of acquisition.
Investment in Available-for-Sale Securities. The Partnership has
investments in stock warrants in public companies. The Partnership has
classified its investments in stock warrants as available-for-sale in accordance
with FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Available-for- sale securities are stated at their fair
market value, with unrealized gains and losses reported as a separate component
of partners' capital. The stock warrants held by the Partnership were granted by
certain lessees or borrowers as additional compensation for leasing or financing
equipment. At the date of grant, such warrants were determined to have no fair
market value and were recorded at their historical cost of $0.
Notes Receivable. Notes receivable generally are stated at their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.
Impaired Notes Receivable. Generally, notes receivable are classified
as impaired and the accrual of interest on such notes is discontinued when the
contractual payment of principal or interest has become 90 days past due or
management has serious doubts about further collectibility of the contractual
payments, even though the loan may currently be performing. When a note
receivable is classified as impaired, income recognition is discontinued. Any
payments received subsequent to the placement of the note receivable on to
<PAGE>
Page 16 of 28
impaired status will generally be applied towards the reduction of the
outstanding note receivable balance, which may include previously accrued
interest as well as principal. Once the principal and accrued interest balance
has been reduced
to zero, the remaining payments will be applied to interest income. Generally,
notes receivable are restored to accrual status when the obligation is brought
current, has performed in accordance with the contractual terms for a reasonable
period of time and the ultimate collectibility of the total contractual
principal and interest is no longer in doubt.
Allowance for Losses. An allowance for losses is established through
provisions for losses charged against income. Notes receivable deemed to be
uncollectible are charged against the allowance for losses, and subsequent
recoveries, if any, are credited to the allowance.
Reclassification. Certain 1995 and 1994 amounts have been reclassified
to conform to the 1996 presentation.
Non-Cash Investing Activities. During the quarter ended December 31,
1996, the Partnership acquired 5,143 shares of common stock valued at $90,000 as
a result of an exercise of a stock warrant option.
During the year ended December 31, 1996 and 1995, the Partnership
recorded an unrealized loss on available-for-sale securities which has been
included in Other Assets, of $119,000 and a gain of $488,000, respectively.
Cash and Cash Equivalents. Cash and cash equivalents include deposits
at banks, investments in money market funds and other highly liquid short-term
investments with original maturities of less than 90 days. The Partnership
places its cash deposits in temporary cash investments with credit worthy, high
quality financial institutions. The concentration of such cash deposits and
temporary cash investments is not deemed to create a significant risk to the
Partnership.
Credit and Collateral. The Partnership's activities have been
concentrated in the equipment leasing and financing industry. A credit
evaluation is performed by the General Partner for all leases and loans made,
with the collateral requirements determined on a case-by-case basis. The
Partnership's loans are generally secured by the equipment or assets financed
and, in some cases, other collateral of the borrower. In the event of default,
the Partnership has the right to foreclose upon the collateral used to secure
such loans.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1996 1995
---- ----
(Amounts in Thousands)
Lease payments $ 256 $ 413
Property taxes 66 137
Interest 16 --
Other 2 16
----- -----
340 566
Less: allowance for losses on accounts receivable (153) (194)
----- -----
Total $ 187 $ 372
===== =====
<PAGE>
Page 17 of 28
Note 4. Notes Receivable:
Notes receivable consist of the following at December 31:
1996 1995
---- ----
(Amounts in Thousands)
Notes receivable from emerging growth
companies, with stated interest
ranging from 10% to 22% per annum,
receivable in installments ranging
from 36 to 49 months, collateralized
by a security interest in the
equipment financed $ 1,913 $ 1,011
Notes receivable from other businesses,
with stated interest ranging from
13% to 16% per annum, receivable in
installments ranging from 48 to 85
months, collateralized by the
equipment financed 1,544 531
------- -------
3,457 1,542
Less: allowance for losses on notes receivable (124) (55)
------- -------
Total $ 3,333 $ 1,487
======= =======
The Partnership received a settlement on a note receivable from a cable
television system operator during the year ended December 31, 1995. This note
receivable was impaired. The Partnership received $1,269,000 as a settlement for
this note receivable of which $800,000 was applied towards the outstanding note
receivable balance and the remaining $469,000 applied towards interest income.
There was an allowance for losses on notes receivable of $284,000 for this note
receivable. Because the settlement exceeded the net carrying value of the note
receivable, this allowance was reversed and recognized as income in 1995.
At December 31, 1996 and 1995, there were no recorded investments in
notes that were considered to be impaired. The average recorded investment in
impaired loans during the year ended December 31, 1996 and 1995 were $0 and
$684,000, respectively. The Partnership recognized $470,000 in interest income
from impaired notes during the year ended December 31, 1995.
The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:
1996 1995
---- ----
(Amounts in Thousands)
Beginning balance $ 55 $ 309
Provision for (recovery of) losses 69 (254)
Write downs -- --
----- -----
Ending balance $ 124 $ 55
===== =====
Note 5. Equipment on Operating Leases and Investment in Financing Leases.
Equipment on lease consists primarily of computer peripheral equipment
and other capital equipment.
The Partnership's operating leases are for initial lease terms of
approximately 19 to 36 months. During the remaining terms of existing operating
leases, the Partnership will not recover all of the undepreciated cost and
related expenses of its rental equipment, and therefore must remarket a portion
of its equipment in future years.
The Partnership has also entered into direct lease arrangements with
businesses in different industries located throughout the United States.
Generally, it is the responsibility of the lessee to provide maintenance on
leased equipment. The General Partner administers the equipment portfolio of
leases acquired through the direct leasing program. Administration includes the
collection of rents from the lessees and remarketing of the equipment.
<PAGE>
Page 18 of 28
The net investment in financing leases consists of the following at
December 31:
1996 1995
---- ----
(Amounts in Thousands)
Minimum lease payments to be received $ 18,946 $ 24,794
Less: unearned income (3,288) (4,642)
allowance for early termination (519) (238)
-------- --------
Net investment in financing leases $ 15,139 $ 19,914
======== ========
Minimum rentals to be received on noncancellable operating and
financing leases for the years ended December 31 are as follows:
Operating Financing
--------- ---------
(Amounts in Thousands)
1997 ............................................... $ 947 $ 8,539
1998 ............................................... 559 6,044
1999 ............................................... 138 2,809
2000 ............................................... 11 1,024
2001 ............................................... 10 476
Thereafter.......................................... -- 54
------- -------
Total $ 1,665 $18,946
======= =======
The net book value of equipment held for lease at December 31, 1996 and
1995 amounted to $278,000 and $714,000, respectively.
Note 6. Investment in Joint Ventures.
Equipment Joint Venture.
On August 1, 1994, the Partnership entered into an agreement along with
two other affiliated partnerships to contribute certain leased assets and notes
receivable (the "Assets") to Phoenix Acceptance Limited Liability Company, a
Delaware limited liability company (the "Joint Venture") in exchange for a
32.48% equity interest in the Joint Venture. The interest received in the Joint
Venture was accounted for at the historical cost basis of the Assets
transferred. The Partnership has accounted for its net investment in this Joint
Venture using the equity method of accounting. The Joint Venture was organized
to hold title to the assets and subsequently transfer such assets to a trust for
the purpose of the trust issuing two classes of lease backed certificates to
third parties in exchange for cash proceeds. The transaction between the Joint
Venture and the trust has been accounted for as a financing. The Joint Venture
retains a residual interest in the assets transferred through the ownership of a
third class of subordinated trust certificates. The lease backed certificates
are recourse only to the assets used to collateralize the obligation.
The net carrying value of such assets contributed by the Partnership to
the Joint Venture was approximately $7.9 million and the total carrying value of
all of the assets contributed by all three partnerships approximated $24.7
million. The net proceeds from the issuance of the lease backed certificates are
being distributed back to the partnerships who contributed to the Joint Venture.
On August 5, 1994, the Joint Venture received proceeds from the issuance of the
7.1% Class A lease backed certificates in the principal amount of $18.5 million.
On August 12, 1994, the Joint Venture received proceeds from the issuance of the
8.25% Class B lease backed certificates in the principal amount of $5.3 million.
In November 1996, the lease backed certificates were paid in full.
The Manager of the Joint Venture is Phoenix Leasing Incorporated. The
manager is responsible for the daily management of the operations of the Joint
Venture. Phoenix Leasing Incorporated also acts as Servicer and Administrator to
the trust. As Servicer, Phoenix Leasing Incorporated is responsible for
servicing, managing and administering the Assets, as well as enforcing and
making collections on the Assets.
The Equipment Joint Venture owned by the Partnership, along with its
percentage of ownership is as follows:
<PAGE>
Page 19 of 28
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Acceptance Limited Liability Company 32.48%
<TABLE>
An analysis of the Partnership's investment in the Equipment Joint Venture is as follows:
<CAPTION>
Net Investment Net Investment
at Beginning Equity in at End
Date of Period Contributions Earnings Distributions of Period
- ---- --------- ------------- -------- ------------- ---------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1994 $ -- $ 7,936 $295 $6,974 $1,257
========= ========= ==== ====== ======
Year Ended
December 31, 1995 $ 1,257 $ -- $385 $ 463 $1,179
========= ========= ==== ====== ======
Year Ended
December 31, 1996 $ 1,179 $ 46 $285 $ 350 $1,160
========= ========= ==== ====== ======
</TABLE>
The aggregate financial information of the Equipment Joint Venture as
of December 31 and for the years then ended is presented as follows:
BALANCE SHEET
ASSETS
December 31,
1996 1995
---- ----
(Amounts in Thousands)
Cash and cash equivalents $ 490 $ 1,384
Accounts receivable 59 14
Equipment on operating lease 155 347
Investment in finance leases 2,930 8,816
Other assets 368 1,018
------- -------
Total Assets $ 4,002 $11,579
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 382 $ 761
Lease backed certificates -- 7,150
Partners' capital 3,620 3,668
------- -------
Total Liabilities and Partners' Capital $ 4,002 $11,579
======= =======
STATEMENT OF OPERATIONS
INCOME
For the Years Ended
December 31,
1996 1995 1994
---- ---- ----
(Amounts in Thousands)
Earned income, financing leases $ 855 $1,924 $1,515
Rental income 536 196 --
Gain on sale of equipment 453 465 26
Other income 181 361 239
------ ------ ------
Total Income 2,025 2,946 1,780
------ ------ ------
<PAGE>
Page 20 of 28
EXPENSES
Depreciation 261 104 4
Management fee to the General Partner 284 283 192
Interest expense 221 924 633
Other expenses 383 450 43
------ ------ ------
Total Expenses 1,149 1,761 872
------ ------ ------
Net Income $ 876 $1,185 $ 908
====== ====== ======
As of December 31, 1996 and 1995 the Partnership's pro rata interest in
the Equipment Joint Venture's net book value of off-lease equipment was $2,000
and $8,000, respectively.
The General Partner earns a management fee of 3% of the Partnership's
respective interest in gross revenues of the Joint Venture. A management fee of
$743,000 based on cash distributed to the venturers was paid to the General
Partner in 1994. Such fees have been capitalized and fully amortized. Cash
proceeds subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level.
Financing Joint Venture.
The Partnership owns an interest in a Financing Joint Venture. This
investment is accounted for using the equity method of accounting. The other
partners of the venture are entities organized and managed by the General
Partner.
The following information summarizes the Partnership's respective
interest in the Financing Joint Venture.
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Joint Venture 1994-2 25.00%
<TABLE>
An analysis of the Partnership's investment account in the Financing Joint Venture is as follows:
<CAPTION>
Net Investment Equity in Net Investment
at Beginning Earnings at End
Date of Period Contributions (Losses) Distributions of Period
- ---- --------- ------------- -------- ------------- ---------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1994 $ -- $ 290 $- $- $290
======== ======= ===== ===== ====
Year Ended
December 31, 1995 $ 290 $ -- $ 44 $ 64 $270
======== ======= ===== ===== ====
Year Ended
December 31, 1996 $ 270 $ -- $ 39 $ 86 $223
-------- ======= ===== ===== ====
</TABLE>
The aggregate financial information of the Financing Joint Venture as
of December 31 and for the years then ended is presented as follows:
BALANCE SHEET
ASSETS
December 31,
1996 1995
---- ----
(Amounts in Thousands)
Cash and cash equivalents $ 155 $ 271
Note receivable, net 823 977
Accounts receivable 14 11
Other assets 31 37
------ ------
Total Assets $1,023 $1,296
====== ======
<PAGE>
Page 21 of 28
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 130 $ 215
Partners' capital 893 1,081
------ ------
Total Liabilities and Partners' Capital $1,023 $1,296
====== ======
STATEMENT OF OPERATIONS
INCOME
For the Years Ended
December 31,
1996 1995 1994
---- ---- ----
(Amounts in Thousands)
Interest income $158 $187 $ 2
Other income 4 2 --
---- ---- ----
Total Income 162 189 $ 2
---- ---- ----
EXPENSES
Management fees to the General Partner $ 6 $ 7 $--
Other expenses -- 6 1
---- ---- ----
Total Expenses 6 13 1
---- ---- ----
Net Income $156 $176 $ 1
==== ==== ====
The General Partner earns a management fee of 3% of the Partnership's
respective interest in gross receipts of the Financing Joint Venture. Revenues
subject to a management fee at the joint venture level are not subject to
management fees at the Partnership level.
Note 7. Accounts Payable and Accrued Expenses.
Accounts payable and accrued expenses consist of the following at
December 31:
1996 1995
---- ----
(Amounts in Thousands)
Equipment Lease Operations $ 826 $ 585
General Partner and Affiliates 82 110
Security Deposits 177 261
Other 41 89
------ ------
Total $1,126 $1,045
====== ======
Note 8. Notes Payable.
Notes payable consist of the following at December 31:
1996 1995
---- ----
(Amounts in Thousands)
Notes payable to banks, collateralized by
leased equipment with variable rates of
interest tied to the bank's reference
rate or Euro Dollar rate, with payment
terms ranging from 40 to 48 months $-- $3,594
===== ======
<PAGE>
Page 22 of 28
Note 9. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
The net differences between the tax basis and the reported amounts of
the Partnership's assets and liabilities are as follows at December 31:
Reported Amounts Tax Basis Net Difference
---------------- --------- --------------
(Amounts in Thousands)
1996
- ----
Assets $24,988 $24,278 $ 710
Liabilities 1,126 901 225
1995
- ----
Assets $31,207 $31,728 $ (521)
Liabilities 4,639 4,076 563
Note 10. Related Entities.
Affiliates of the General Partner serve in the capacity of general
partners in other partnerships, all of which are engaged in the equipment
leasing and financing business.
Note 11. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the Limited Partner's share of net income and distributions, and the weighted
average number of units outstanding of 1,968,615, 2,014,723 and 2,035,084 for
the years ended December 31, 1996, 1995 and 1994, respectively. For the purposes
of allocating income (loss) and distributions to each individual Limited
Partner, the Partnership allocates net income (loss) and distributions based
upon each respective Limited Partner's net capital contributions.
Note 12. Reimbursed Costs to the General Partner and Affiliates.
The General Partner and affiliates incur certain administrative costs
such as data processing, investor and lessee communications, lease
administration, accounting, equipment storage and equipment remarketing, for
which it is reimbursed by the Partnership. These expenses incurred by the
General Partner and affiliates are to be reimbursed at the lower of the actual
costs or an amount equal to 90% of the fair market value for such services.
The reimbursed administrative costs to the General Partner were
$370,000, $434,000 and $380,000 for the years ended December 31, 1996, 1995 and
1994, respectively. The equipment storage, remarketing and data processing costs
reimbursed to the General Partner during the years ended December 31, 1996, 1995
and 1994 were $200,000, $251,000 and $105,000, respectively.
In addition, the General Partner receives a management fee and an
acquisition fee (see Note 1).
Note 13. Fair Value of Financial Instruments.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument which it is practicable to estimate
that value.
<PAGE>
Page 23 of 28
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Notes Receivable
The fair value of notes receivable is estimated by discounting the expected
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings.
Securities, Available-for-Sale
The fair values of investments in available for sale securities are estimated
based on quoted market prices.
Notes Payable
The carrying amount of the Partnership's variable rate notes payable
approximates fair value.
The estimated fair values of the Partnership's financial instruments are as
follows at December 31:
Carrying
Amount Fair Value
------ ----------
1996 (Amounts in Thousands)
- ----
Assets
Cash and cash equivalents $3,140 $3,140
Securities, available-for-sale 369 369
Notes receivable 3,333 3,505
1995
- ----
Assets
Cash and cash equivalents $3,131 $3,131
Securities, available-for-sale 488 488
Notes receivable 1,487 1,520
Liabilities
Notes payable 3,594 3,594
Note 14. Subsequent Events.
In January 1997, cash distributions of $30,000 and $499,000 were made
to the General and Limited Partners, respectively.
<PAGE>
Page 24 of 28
Item 9. Disagreements on Accounting and Financial Disclosure Matters.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The registrant is a limited partnership and, therefore, has no
executive officers or directors. The General Partner of the Registrant is
Phoenix Leasing Associates II L.P., a California limited partnership, the
Corporate General Partner of which is Phoenix Leasing Associates II, Inc., a
Nevada corporation and a wholly-owned subsidiary of Phoenix Leasing Incorporated
(PLI), a California corporation.
The directors and executive officers of Phoenix Leasing Associates II,
Inc. (PLAII) are as follows:
GUS CONSTANTIN, age 59, is President, and a Director of PLAII. Mr.
Constantin received a B.S. degree in Engineering from the University of Michigan
and a Master's Degree in Management Science from Columbia University. From 1969
to 1972, he served as Director, Computer and Technical Equipment of DCL
Incorporated (formerly Diebold Computer Leasing Incorporated), a corporation
formerly listed on the American Stock Exchange, and as Vice President and
General Manager of DCL Capital Corporation, a wholly-owned subsidiary of DCL
Incorporated. Mr. Constantin was actively engaged in marketing manufacturer
leasing programs to computer and medical equipment manufacturers and in
directing DCL Incorporated's IBM System/370 marketing activities. Prior to 1969,
Mr. Constantin was employed by IBM as a data processing systems engineer for
four years. Mr. Constantin is an individual general partner in four active
partnerships and is an NASD registered principal. Mr. Constantin is the founder
of PLI and the beneficial owner of all of the common stock of Phoenix American
Incorporated.
PARITOSH K. CHOKSI, age 43, is Senior Vice President, Chief Financial
Officer, Treasurer and a Director of PLAII. He has been associated with PLI
since 1977. Mr. Choksi oversees the finance, accounting, information services
and systems development departments of the General Partner and its Affiliates
and oversees the structuring, planning and monitoring of the partnerships
sponsored by the General Partner and its Affiliates. Mr. Choksi graduated from
the Indian Institute of Technology, Bombay, India with a degree in Engineering.
He holds an M.B.A. degree from the University of California, Berkeley.
GARY W. MARTINEZ, age 46, is Senior Vice President and a Director of
PLAII. He has been associated with PLI since 1976. He manages the Asset
Management Department, which is responsible for lease and loan portfolio
management. This includes credit analysis, contract terms, documentation and
funding; remittance application, change processing and maintenance of customer
accounts; customer service, invoicing, collection, settlements and litigation;
negotiating lease renewals, extensions, sales and buyouts; and management
information reporting. From 1973 to 1976, Mr. Martinez was a Loan Officer with
Crocker National Bank, San Francisco. Prior to 1973, he was an Area Manager with
Pennsylvania Life Insurance Company. Mr. Martinez is a graduate of California
State University, Chico.
BRYANT J. TONG, age 42, is Senior Vice President, Financial Operations
of PLAII. He has been with PLI since 1982. Mr. Tong is responsible for investor
services and overall company financial operations. He is also responsible for
the technical and administrative operations of the cash management, corporate
accounting, partnership accounting, accounting systems, internal controls and
tax departments, in addition to Securities and Exchange Commission and other
regulatory agency reporting. Prior to his association with PLI, Mr. Tong was
Controller-Partnership Accounting with the Robert A. McNeil Corporation for two
years and was an auditor with Ernst & Whinney (succeeded by Ernst & Young) from
1977 through 1980. Mr. Tong holds a B.S. in Accounting from the University of
California, Berkeley, and is a Certified Public Accountant.
Neither the General Partner nor any Executive Officer of the General
Partner has any family relationship with the others.
Phoenix Leasing Incorporated or its affiliates and the executive
officers of the General Partner serve in a similar capacity to the following
affiliated limited partnerships:
<PAGE>
Page 25 of 28
Phoenix Leasing American Business Fund, L.P.
Phoenix Income Fund, L.P.
Phoenix High Tech/High Yield Fund
Phoenix Leasing Cash Distribution Fund IV
Phoenix Leasing Cash Distribution Fund III
Phoenix Leasing Cash Distribution Fund II
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI
Phoenix Leasing Growth Fund 1982 and
Phoenix Leasing Income Fund 1977
Item 11. Executive Compensation.
Set forth is the information relating to all direct remuneration paid
or accrued by the Registrant during the last year to the General Partner.
<TABLE>
<CAPTION>
(A) (B) (C) (D)
Cash and cash- Aggregate of
Name of Individual Capacities in equivalent forms contingent forms
or persons in group which served of remuneration of remuneration
- ------------------- ------------ ----------------------------------------------- ---------------
(C1) (C2)
Securities or property
Salaries, fees, directors' insurance benefits or
fees, commissions, and reimbursement, personal
bonuses benefits
------------------------- -----------------------
(Amounts in Thousands)
<S> <C> <C> <C>
Phoenix Leasing
Associates II L.P. General Partner $699(1) $0 $0
=== = =
</TABLE>
(1) consists of management and acquisition fees.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) No person owns of record, or is known by the Registrant to own
beneficially, more than five percent of any class of voting
securities of the Registrant.
(b) The General Partner or its affiliates of the Registrant owns the
equity securities of the Registrant set forth in the following
table:
<TABLE>
<CAPTION>
(1) (2) (3)
Title of Class Amount Beneficially Owned Percent of Class
-------------- ------------------------- ----------------
<S> <C> <C>
General Partner Interest Represents a 3% interest in the Registrant's profits 100%
and distributions, until the Limited Partners have
recovered their capital contributions plus a
cumulative return of 10% per annum, compounded
quarterly, on the unrecovered portion thereof.
Thereafter, the General Partner will receive 15%
interest in the Registrant's profits and distributions.
Limited Partner Interest 1,550 units -
</TABLE>
<PAGE>
Page 26 of 28
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Page No.
--------
(a) 1. Financial Statements:
Balance Sheets as of December 31, 1996 and 1995 10
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 11
Statements of Partners' Capital for the Years
Ended December 31, 1996, 1995 and 1994 12
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 13
Notes to Financial Statements 14-23
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
and Reserves 28
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended December 31,
1996.
(c) Exhibits
21. Additional Exhibits:
a) Balance Sheet of Phoenix Leasing
Associates II L.P. E21 1-3
Balance Sheet of Phoenix Leasing
Associates II, Inc. E21 4-7
27. Financial Data Schedule
<PAGE>
Page 27 of 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.,
a California limited partnership
(Registrant)
By: PHOENIX LEASING ASSOCIATES II L.P.,
a California limited partnership,
General Partner
By: PHOENIX LEASING ASSOCIATES II, INC.,
a Nevada corporation,
General Partner
Date: March 25, 1997 By: /S/ GUS CONSTANTIN
-------------- ------------------------
Gus Constantin, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ GUS CONSTANTIN President and a Director March 25, 1997
- ----------------------- of Phoenix Leasing Associates II, Inc. --------------
(Gus Constantin)
/S/ PARITOSH K. CHOKSI Chief Financial Officer, March 25, 1997
- ----------------------- Senior Vice President, --------------
(Paritosh K. Choksi) Treasurer and a Director of
Phoenix Leasing Associates II, Inc.
/S/ BRYANT J. TONG Senior Vice President,
- ----------------------- Financial Operations of March 25, 1997
(Bryant J. Tong) (Principal Accounting Officer) --------------
Phoenix Leasing Associates II, Inc.
/S/ GARY W. MARTINEZ Senior Vice President and a Director of March 25, 1997
- ----------------------- Phoenix Leasing Associates II, Inc. --------------
(Gary W. Martinez)
/S/ MICHAEL K. ULYATT Partnership Controller March 25, 1997
- ----------------------- of Phoenix Leasing Incorporated --------------
(Michael K. Ulyatt) (Parent Company)
<PAGE>
<TABLE>
Page 28 of 28
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
SCHEDULE II
(Amounts in Thousands)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Classification Balance at Charged to Charged to Deductions Balance at
Beginning of Expense Revenue End of Period
Period
-------------- ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for losses on accounts
receivable $ 110 $ 65 $ 0 $ 4 $ 171
Allowance for early termination
of financing leases 238 369 0 44 563
Allowance for losses on notes
receivable 299 10 0 0 309
------ ---- ---- ---- ------
Totals $ 647 $444 $ 0 $ 48 $1,043
====== ==== ==== ==== ======
Year ended December 31, 1995
Allowance for losses on accounts
receivable $ 171 $ 28 $ 0 $ 5 $ 194
Allowance for early termination
of financing leases 563 303 0 628 238
Allowance for losses on notes
receivable 309 0 254 0 55
------ ---- ---- ---- ------
Totals $1,043 $331 $254 $633 $ 487
====== ==== ==== ==== ======
Year ended December 31, 1996
Allowance for losses on accounts
receivable $ 194 $ 0 $ 0 $ 41 $ 153
Allowance for early termination
of financing leases 238 281 0 0 519
Allowance for losses on notes
receivable 55 69 0 0 124
------ ---- ---- ---- ------
Totals $ 487 $350 $ 0 $ 41 $ 796
====== ==== ==== ==== ======
</TABLE>
Exhibit 21 - Page 1 of 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Phoenix Leasing Associates II L.P.:
We have audited the accompanying balance sheets of Phoenix Leasing Associates II
L.P. (a California limited partnership) as of June 30, 1996 and 1995. These
balance sheets are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these balance sheets based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the balance sheets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheets. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the balance sheets referred to above present fairly, in all
material respects, the financial position of Phoenix Leasing Associates II L.P.
as of June 30, 1996 and 1995, in conformity with generally accepted accounting
principles.
San Francisco, California ARTHUR ANDERSEN LLP
September 4, 1996
<PAGE>
Exhibit 21 - Page 2 of 7
PHOENIX LEASING ASSOCIATES II L.P.
BALANCE SHEETS
ASSETS
June 30,
1996 1995
---- ----
Cash and cash equivalents ...................... $ 847 $ 8
Due from CDF V ................................. 76,830 63,616
Due from General Partner ....................... 14,561 49,887
------- --------
Total Assets .......................... $92,238 $113,511
======= ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses ....... $ 2,200 $ 2,519
Deficit investment in CDF V ................. 87,750 94,627
------- --------
Total Liabilities ..................... 89,950 97,146
Commitments and Contingencies (Note 4)
Partners' Capital:
General Partner (99 partnership units) ...... 990 990
Limited Partner (99 partnership units) ...... 1,299 15,375
------- --------
Total Partners' Capital ............... 2,289 16,365
------- --------
Total Liabilities and Partners' Capital $92,238 $113,511
======= ========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
Exhibit 21 - Page 3 of 7
PHOENIX LEASING ASSOCIATES II L.P.
NOTES TO THE BALANCE SHEETS
JUNE 30, 1996
Note 1. Organization:
Phoenix Leasing Associates II L.P., a California limited partnership (the
Partnership), was formed under the laws of the State of California on August 17,
1990, to act as the general partner of Phoenix Leasing Cash Distribution Fund V,
L.P. (CDF V), a California limited partnership. The Partnership's fiscal year
ends on June 30 of each year. The general partner of the Partnership is Phoenix
Leasing Associates II, Inc. (PLAII), a Nevada corporation and wholly-owned
subsidiary of Phoenix Leasing Incorporated (PLI), a California corporation. The
limited partner of the partnership is Lease Management Associates, Inc., a
Nevada corporation controlled by an officer of PLAII, who owns the ultimate
parent of PLAII.
The Partnership records its investment in CDF V under the equity method of
accounting. As general partner, the Partnership has complete authority in, and
responsibility for, the overall management and control of CDF V, which includes
responsibility for supervising CDF V's acquisition, leasing, remarketing and
sale of equipment.
Note 2. Income Taxes:
The Partnership is not subject to federal and state income taxes on its
income. Federal and state income tax regulations provide that items of income,
gain, loss and deductions, credits and tax preference items of limited
partnerships are reportable by the individual partners in their respective
income tax returns. Accordingly, no liability for such taxes has been recorded
on the Partnership's balance sheets.
Note 3. Use of Estimates:
The preparation of balance sheets in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the balance sheets. Actual
results could differ from those estimates.
Note 4. Compensation and Fees:
The Partnership receives acquisition fees equal to three percent of the
purchase price of assets acquired or financed by CDF V in connection with the
analysis, selection and acquisition or financing of assets, and the continuing
analysis of the overall portfolio of CDF V's assets, and management fees equal
to three percent of CDF V's gross revenues in connection with managing the
operations of CDF V. In addition, the Partnership receives an interest in CDF
V's profits, losses and distributions. Management fees of $76,521 and $38,238
and acquisition fees of $309 and $25,378 are included in Due from CDF V as of
June 30, 1996 and 1995, respectively.
Note 5. Allocation of Profits, Losses and Distributions:
Profits and losses attributable to acquisition fees paid to the Partnership
by CDF V are allocated to the partners in proportion to their ownership
interests. All other profits and losses are allocated to PLAII. Distributions
are made in accordance with the terms of the partnership agreement.
Note 6. Related Parties:
Phoenix Securities, Inc., an affiliate of the Partnership, receives a fee
for wholesaling activities performed in connection with the offering of the
limited partnership units of CDF V.
PLAII has entered into an agreement with PLI whereby PLI will provide
management services to the Partnership in connection with the operations and
administration of CDF V. In consideration for the services and activities to be
performed by PLI pursuant to this agreement, PLAII pays PLI fees in an amount
equal to: Three percent of CDF V's cumulative gross revenues plus the lesser of
three percent of the purchase price of equipment acquired by and financing
provided to businesses by CDF V or 100% of the net cash attributed to the
acquisition fee which has been distributed to PLAII plus 100% of all other net
cash from operations of the Partnership. Management fees paid to PLI equal
$759,627 and $886,975 for the year ended June 30, 1996 and 1995, respectively.
<PAGE>
Exhibit 21 - Page 4 of 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Phoenix Leasing Associates II, Inc.:
We have audited the accompanying consolidated balance sheets of Phoenix Leasing
Associates II, Inc. (a Nevada corporation) and Subsidiary as of June 30, 1996
and 1995. These consolidated balance sheets are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated balance sheets based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated balance sheets are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheets. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall consolidated balance sheet
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated balance sheets referred to above present
fairly, in all material respects, the financial position of Phoenix Leasing
Associates II, Inc. and Subsidiary as of June 30, 1996 and 1995, in conformity
with generally accepted accounting principles.
San Francisco, California ARTHUR ANDERSEN LLP
September 4, 1996
<PAGE>
Exhibit 21 - Page 5 of 7
PHOENIX LEASING ASSOCIATES II, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30,
1996 1995
---- ----
Cash and cash equivalents ......................... $ 952 $ 177
Due from PLI ...................................... 982,581 633,324
Due from CDF V .................................... 76,830 63,616
----------- -----------
Total Assets ............................. $ 1,060,362 $ 697,117
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses .......... $ 4,400 $ 5,040
Deficit investment in CDF V .................... 87,750 94,627
----------- -----------
Total Liabilities ........................ 92,150 99,667
----------- -----------
Minority Interest in Consolidated Subsidiary ...... 1,299 15,375
----------- -----------
Commitments and Contingencies (Note 6)
Shareholder's Equity:
Common Stock, without par value, 100 shares
authorized and outstanding ................... 4,000,100 4,000,100
Retained earnings .............................. 966,814 581,975
Less:
Note receivable from affiliate ............... (4,000,000) (4,000,000)
----------- -----------
Total Shareholder's Equity ............... 966,914 582,075
----------- -----------
Total Liabilities and Shareholder's Equity $ 1,060,362 $ 697,117
=========== ===========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
Exhibit 21 - Page 6 of 7
PHOENIX LEASING ASSOCIATES II, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996
Note 1. Organization:
Phoenix Leasing Associates II, Inc., (the Company), was formed under the
laws of Nevada on June 14, 1990. The Company has a June 30 fiscal year-end. The
Company is a wholly-owned subsidiary of Phoenix Leasing Incorporated (PLI), a
California corporation, and was originally formed to serve as the general
partner of Phoenix Leasing Cash Distribution Fund V, L.P. (CDF V), a California
limited partnership.
On August 17, 1990, the Company organized Phoenix Leasing Associates II
L.P., a California limited partnership (PLAIILP) to replace the Company as the
general partner in CDF V. The limited partner of PLAIILP is Lease Management
Associates, Inc., a Nevada corporation controlled by an officer of the Company,
who also owns the parent company of PLI. As the general partner of CDF V,
PLAIILP earns acquisition and management fees and receives the profits, losses
and distributions which are to be allocated to the Company (Note 5). The Company
is the general partner of PLAIILP and, as of June 30, 1996 and 1995 has a 50%
ownership interest. This ownership interest is subject to change in accordance
with the PLAIILP Partnership Agreement. Profits, losses and distributions
attributable to acquisition fees paid to PLAIILP by CDF V are allocated in
proportion to the partners' ownership interests. All other profits, losses and
distributions are allocated to the Company. The financial statements as of June
30, 1996 and 1995 are presented on a consolidated basis as discussed in Note 2.
Note 2. Principles of Consolidation:
The consolidated financial statements as of June 30, 1996 and 1995, include
the accounts of the Company and its subsidiary, PLAIILP, over which the company
exerts significant control and influence. All significant intercompany accounts
and transactions have been eliminated in consolidation. The minority interest
represents the limited partner's interest in PLAIILP.
The Company records its investment in CDF V under the equity method of
accounting. As general partner, the Company has complete authority in, and
responsibility for, the overall management and control of CDF V, which includes
responsibility for supervising CDF V's acquisition, leasing, remarketing
activities and its sale of equipment.
Note 3. Use of Estimates:
The preparation of consolidated balance sheets in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
balance sheets. Actual results could differ from those estimates.
Note 4. Notes Receivable from Affiliate:
PLI, the sole shareholder of the Company, as of June 30, 1996 and 1995, has
issued demand promissory notes to the Company totaling $4,000,000. There are no
restrictions or covenants associated with this note which would preclude the
Company from receiving the principal or interest amounts under the terms of the
notes. The notes bear interest at a rate equal to the lesser of 10% or prime
rate plus 1%, as determined by Citibank, N.A., New York, New York. Interest is
payable by PLI on the first business day of each calendar quarter. The principal
amount is due and payable upon demand by the Company.
Note 5. Income Taxes:
The Company's income or loss for tax reporting purposes is included in the
consolidated and combined tax returns filed by Phoenix American Incorporated
(PAI), an affiliated Nevada corporation. These returns are prepared on the
accrual basis of accounting. In accordance with a Tax Sharing Agreement between
the Company and PAI, PAI has assumed all tax liabilities and benefits arising
from the Company's income or loss.
Effective July 1, 1993, the Company adopted "Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes" (FAS 109). The
Company computes taxes as if it was a stand alone company. The resulting tax
provisions of $234,305 and $9,254, as of June 30, 1996 and 1995, respectively,
were transferred to PAI.
<PAGE>
Exhibit 21 - Page 7 of 7
Note 6. Compensation and Fees:
PLAIILP receives acquisition fees equal to three percent of the purchase
price of assets acquired or financed by CDF V in connection with the analysis,
selection and acquisition or financing of assets, and the continuing analysis of
the overall portfolio of the CDF V's assets, and management fees equal to three
percent of CDF V's gross revenues in connection with managing the operations of
CDF V. In addition, PLAIILP receives an interest in CDF V's profits, losses and
distributions. Management fees of $76,521 and $38,238 and acquisition fees of
$309 and $25,378 are included in Due from CDF V as of June 30, 1996 and 1995,
respectively.
Note 7. Related Parties:
Phoenix Securities, Inc., an affiliate of the Company, receives a fee for
wholesaling activities performed in connection with the offering of the limited
partnership units of CDF V.
The Company has entered into an agreement with PLI, whereby PLI will
provide management services to PLAIILP in connection with the operations and
administration of CDF V. In consideration for the services and activities to be
performed by PLI pursuant to this agreement, the Company pays PLI fees in an
amount equal to: Three percent of CDF V's cumulative gross revenues plus the
lesser of three percent of the purchase price of equipment acquired by and
financing provided to businesses by CDF V or 100% of the net cash attributable
to the acquisition fee which has been distributed to the Company plus 100% of
all other net cash from operations of PLAIILP. Management fees paid to PLI equal
$759,627 and $886,975 for the year ended June 30, 1996 and 1995, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,140
<SECURITIES> 0
<RECEIVABLES> 3,797
<ALLOWANCES> 277
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,108
<DEPRECIATION> 8,389
<TOTAL-ASSETS> 24,988
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,862
<TOTAL-LIABILITY-AND-EQUITY> 24,988
<SALES> 0
<TOTAL-REVENUES> 7,362
<CGS> 0
<TOTAL-COSTS> 5,204
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 350
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> 2,158
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,158
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,158
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0
</TABLE>
